Digital Assets: Estate Planning for Online Life

December 2012

This month’s newsletter provides a brief look into dealing with digital assets and other online aspects of our life, including those that may not have intrinsic value, upon one’s death. As more of our life is being moved into various digital forms, ensure such things are considered is an emerging and important area of estate planning.

Passing on Digital Assets

Most individuals today increasingly have aspects of their lives moved into digital form. Whether it is moving files to “the cloud” and making purchases via digital services, we now have to consider what rights are and are not received when we use these services. Technology continues to remain light-years ahead of legislation and, as such, there continues to be a thick fog around digital assets that can be difficult to navigate, particularly since the map is barely sketched!

One question that must be considered is – how can digital possessions be passed on to loved ones upon death?

Consider the music and movies you purchased on ITunes, your eBooks on your Kindle, your social media services, your ebay account, email, the documents and pictures you have saved in the “Cloud”, or any of the other growing number of online products that you downloaded or purchased.

These services provide a convenient choice right now, but have you ever read the terms and conditions you agree to when you sign up with services? We will look at some of the challenges of passing on digital assets after you die and discuss some practical tips how to deal with these issues.

Movies, Music and eBooks

What people find most surprising about their purchases on ITunes, Amazon.com or similar music, film and digital bookstores sites is that you are not actually purchasing the content of the file you download. Instead, you are purchasing a license to use the song, movie or book for an indefinite period. The scope of license granted by service providers is non-transferable, which means you cannot pass on the goods you have purchased to another person. The terms and conditions do not always explicitly rule out sharing downloads but may instead use language which implies it isn’t allowed.

A non-transferable license means that after someone dies, the license ceases and the estate does not have the right to transfer the goods to a different account or user. However, there are other ways the files may be left to someone. For example, you can gift an iPod or kindle to someone in your will, which would include digital downloads saved on the device.

Some people feel that you can work around the license issue by sharing your passwords and account information with the executor of your estate. The problem with this approach is that allowing someone who is not the owner of the account to access it may be a breach of the terms and conditions of the agreement and could lead to the service provider suspending the account.

Social Media

The major social media companies also have strict rules in their terms and conditions which prevent users from transferring their accounts. Facebook, explicitly states that “you will not transfer your account… to anyone without first getting [Facebook’s] written permission”. Facebook will, however, convert a deceased person’s account into a memorial page if they receive proof that the individual has passed away, such as an obituary or news article. This can be done by any person, provided that they can send the proof of death. If family or next of kin does not want the account to be memorialized, a death certificate and the person’s account information must be provided, and then Facebook will remove the account.

Similarly, Twitter grants “a personal, worldwide, royalty-free, non-assignable and non-exclusive” license to use their service. This phrasing also suggests that your account cannot be transferred from one person to another. Twitter also has an Inactive Account Policy whereby they may deactivate your account if you have not logged in for a six month period.

The Cloud

Cloud computing and Cloud storage are online services whereby users can use and access software and store files via the internet. iCloud, Dropbox, Googledocs are examples of these services, which allows you to store photos, music, books, documents, applications and access them from anywhere. These services also tend to be non-transferrable, and may even terminate on death. For example, iCloud accounts explicitly state that they are “non-transferable and that any rights to your… account terminate upon your death.” This means that after your death you would lose access to all the information that is stored in the cloud.

Solutions?

Digital accounts and agreements are still uncharted territory and the law makes no explicit provisions for these circumstances. To further complicate the matter, unlike most other things in a will, local law does not govern these digital agreements. For example, in the case of Facebook and Apple, your contract explicitly states that California courts have the sole jurisdiction to make any decisions in the event that a dispute arises.

Unfortunately, it can be argued that all we are really doing is leasing the right to listen to our music, watch our movies, and read our books and that on our death our right to access our goods may be terminated.

The most important way to deal with these accounts is make your wishes known, preferably in a will. If your Executor is not aware of what comprises your digital life, then it can be lost forever. It may also be possible to choose a specific person whose responsibilities it is to solely deal with your digital assets.

This newsletter is produced by Wickwire Holm to keep our clients and friends informed of developments in the law and immerging issues. It is intended for general information purposes only. In preparing and circulating this newsletter, Wickwire Holm is not providing legal or other professional advice. Readers are urged to consult their professional advisers before taking any action on the bases of information contained in this newsletter.

If you have any questions about any issues raised within this newsletter or a related issue, please contact us at wh@wickwireholm.com